From September 01, 2015, credit institutions, foreign banks’ branches shall be only permitted for debt purchase when being approved on the establishment and operation license of credit institutions, establishment license of foreign bank’s branches (hereinafter referred to as the License) by the State Bank and having the bad debt ratio under 3% excluding debt purchase under the restructuring plan as approved. In the case of debt sale, the permission of the State Bank is not required. This is the new content prescribed at the Circular No. 09/2015/TT-NHNN dated July 17, 2015 of the Vietnam State Bank on debt purchase and sale by credit institutions, foreign banks’ branches.
Similarly, Debt Management and Asset Exploitation Company is a subsidy company of credit institution that only purchases debts of other credit institutions, foreign banks’ branches when the head credit institution whose bad debt is below 3%, excluding debt purchase under the approved restructuring plan.
Another important contents is that Credit institutions, foreign banks’ branches must promulgate internal regulations on debt purchase, sale (of which clearly state the distribution of competence under the principle of responsibility distribution among appraisal and decision debt purchase, sale; method of debt purchase, sale; procedures of debt purchase, sale; process of estimating debt; process of auction and risk management for debt purchase, sale transactions before debt purchase, sale. Credit institutions, foreign banks’
branches must comply with regulations on safety in the operation of credit institutions, foreign banks’ branches and debt seller shall not purchase debts that have been sold.
On regulations on the management of foreign currencies in debt purchase, sale transactions, the Circular requires concerned parties to comply with regulation on restrictions on using foreign currencies in Vietnam when doing transactions on debt purchase, sale and debt collection. Accordingly, when processing debt purchase, sale by credit institutions, foreign banks’ branches, the debt purchaser shall use the Vietnamese account to pay credit institutions, foreign banks’ branches for the purchased debts and other expenses as stated in the debt purchase, sale contract for cases that use the Vietnamese dong in debt purchase transactions. And the debt purchaser being non-resident shall use foreign currency account opened at credit institutions, foreign banks’ branches that are permitted on doing transactions in foreign currency in Vietnam or foreign currency account of the debt purchaser in foreign country to pay credit institutions, foreign banks’ branches for the purchased debts and other expenses as stated in the debt purchase, sale contract for cases that use foreign currency in debt purchase transactions.
This Circular takes effect on September 01, 2015 and replaces the Decision No. 59/2006/QD-NHNN dated December 21, 2006
